MOSCOW: BP said it would press ahead and sell a stake in its Russian venture, dismissing a threat by its billionaire partners to block a deal that would help the Kremlin tighten its grip on the country's vast energy sector.
The British oil major said last Friday it would pursue a sale after receiving expressions of interest in its one-half stake in TNK-BP, Russia's third-largest oil producer. Analysts say BP's shareholding is worth $30 billion.
Sources familiar with the matter said BP has been approached by state energy holding company Rosneftegaz, which controls a stake of more than 75 percent in Rosneft, Russia's largest oil firm.
A successful sale of TNK-BP to the state would raise the government-controlled share of Russia's oil output to half and strengthen Vladimir Putin's grip on strategic natural resources weeks after his return to the presidency.
It would also sideline the four billionaires in the AAR shareholder consortium who own the other half of TNK-BP and thwarted an earlier tie-up between BP and Rosneft.
"We have a contractual right to sell," a BP spokesman said in response to a media report that AAR would seek to veto any deal.
BP's announcement of its sale plans triggers a clause in the TNK-BP shareholder agreement that allows it to negotiate with any buyer within 135 days - nearly five months - sources familiar with the matter said.
During an initial period of up to 45 days, AAR would have the right to express an interest in buying BP's stake. That would be followed by good-faith negotiations over 90 days, during which time BP would also be able to hold talks with other possible buyers.
The sequencing puts the ball in the oligarchs' court for six weeks before BP can start talks with any other suitor.
The BP spokesman dismissed a report in the Financial Times that the shareholder agreement barred BP from giving out any confidential information to a third party without AAR's consent, effectively handing the co-owners a veto right over any deal.
"We will meet our obligations under the shareholder agreement and expect Alfa-Access-Renova (AAR) to do the same. We look forward to hearing from AAR directly," the spokesman said, adding that sale talks could take several months.
A source close to AAR said it was considering buying BP's stake. "Now that BP has sent its notice, AAR has the priority right to require BP to negotiate in good faith a purchase by AAR of TNK-BP shares from BP," the source said.
"Effectively, this right creates a 135-day moratorium on any sale by BP of its TNK-BP shares."
BP and AAR have been at odds for years, with relations dogged by failed deals and legal challenges.
In a further twist on Monday, a Russian court ordered a new hearing into a $13 billion lawsuit brought against BP by minority shareholders in TNK-BP over the failed BP-Rosneft deal, a BP lawyer said.
The Federal Arbitration Court in the Siberian city of Tyumen has sent the case to a lower court, lawyer Konstantin Lukoyanov said, adding the decision "inflicts substantial damage on Russia's investment climate". No date was set for the hearing.
AAR has denied being a party to the minority lawsuit.
Former deputy premier Igor Sechin, a Putin ally who has led strategy at Rosneft for the best part of a decade, was recently named CEO of Rosneft and nominated to the Rosneftegaz board with a mandate, sources say, to build an oil major of global scale.
Gazprom Neft — an oil unit of state gas export monopoly Gazprom that has a joint venture with TNK-BP — may also emerge as a bidder for BP's stake, analysts said.
Gazprom CEO Alexei Miller, speaking in Malaysia, said the company had held no talks with BP but added that "everything is interesting to us", the Interfax news agency reported.
Analysts at Renaissance Capital led by Ildar Davletshin also said an exit by BP from TNK-BP may not lead to its departure from Russia.
"If BP sells its stake to one of the Russian national oil companies, it could simultaneously strike a new deal with a buyer to create a new joint venture, and commit to reinvest part of its gains back in Russia," the analysts wrote in a note.
BP, tied by an exclusivity clause in the TNK-BP shareholder pact, has missed out on a raft of offshore exploration deals announced in recent weeks by Rosneft with US Exxon Mobil, Italy's Eni and Statoil of Norway.
The state approach has put AAR — led by banking-to-retail tycoon Mikhail Fridman — under pressure after it took legal action last year to prevent BP from signing the offshore exploration and $16 billion share-swap deal with Rosneft.
Fridman resigned as chief executive of TNK-BP a week ago, deepening a corporate governance crisis that has deprived its board of a quorum and blocked the payment of dividends.
Industry and political sources say the oligarch shareholders last year lobbied Dmitry Medvedev, then president and now prime minister, to oust Sechin as chairman of Rosneft.
With Putin back in the Kremlin and Sechin in control of Rosneft in both an executive and advisory capacity, it appears increasingly likely that the state will assume control of TNK-BP — either by buying out BP or the oligarchs.
"The end game is that the state buys (TNK-BP)," said one veteran Moscow-based executive. "The issue is that Fridman overplayed his hand a couple of times."
Sources close to AAR have said, meanwhile, that the consortium would be willing to buy out BP for a consideration of $25 billion.
BP paid a total of $8 billion in 2003 for one half of TNK-BP, a hugely profitable, if troubled, investment that has paid $19 billion in dividends and accounts for 29 percent of its output.
BP says oligarchs can't block Russian stake sale
BP says oligarchs can't block Russian stake sale
Speed of Saudi innovation ‘wowing’ UK, says British trade campaign executive
RIYADH: UK delegates at the GREAT Futures Initiative Conference have been “wowed” by Saudi Arabia's business landscape, according to a senior British trade executive.
Speaking during an interview with Arab News, Kate Taylor Tett, director of the GREAT Britain and Northern Ireland Campaign, noted that the event served as a catalyst for change and progress by facilitating cross-sectoral collaboration and dialogue between counterparts from both nations.
She also stressed the fast pace of innovation observed in Saudi Arabia, which has left a strong impression.
“I think what this event has done is put Saudi right at the top of that list. So at the moment, you know, Saudi is the 24th biggest trading partner for the UK,” Tett said.
She added: “I think this top event will really accelerate that because people see it as an opportunity that they need to address right now, not at some point in the future, and hopefully that’s really exciting for businesses.”
Tett also stated that the event attendees were impressed by what they experienced in Saudi Arabia, which led to a shift in their opinions about the market.
“I haven’t spoken to a single person at this event who hasn’t been wowed by what they’ve seen when they’ve come here. I think their opinions have shifted, and that in itself is a huge opportunity,” she said.
Tett also explained that the event is not just a two-day gathering; it is a program that extends over a year and involves various collaborations between UK businesses and counterparts in Saudi Arabia.
“I know there’ll be lots of sort of cross-fertilization in that way, so this, these two days are very much a catalyst for initially a year-long program. But I think what you’ll see is that then that becomes a leap pad for things beyond that,” she said.
Commenting on the UK-Saudi partnerships, Tett emphasized the significance of innovation in collaboration between countries that are actively engaged in progressive undertakings.
She also stressed the fast pace of innovation observed in Saudi Arabia, which has left a strong impression.
“Everybody I’ve spoken to here has just been wowed by the pace of innovation in Saudi. And clearly bringing that innovation together and companies working together just creates these huge opportunities which have an economic benefit on both sides of the partnership,” Tett underscored.
She added: “I think what really hit me has been the energy and the positivity of everybody that I’ve met. I spent some time working in the world of startups, and I think Saudi feels like a huge startup. Everything feels possible.”
She concluded by expressing her enthusiasm among the participants and describing their collective drive to make progress as “really infectious.”
Saudi property forum to enhance local real estate supply chain access
RIYADH: Saudi real estate firms are poised to gain improved access to the supply chain with major industry players set to gather in Riyadh for an event designed to enhance cooperation and forge partnerships.
Under the patronage of the Minister of Municipal and Rural Affairs and Housing Majid bin Abdullah Al-Hogail, the National Housing Co. will host the Real Estate Supply Chain Forum from May 20 to 21 at the JW Marriot Hotel Riyadh, with the aim of fostering the growth of the property sector.
The event will gather a diverse array of local and international companies, consultants, contractors, and manufacturers to explore collaborative opportunities aimed at delivering integrated housing projects focused on quality and affordability, according to the Saudi Press Agency.
The forum will also provide promising investment opportunities, facilitate the signing of investment agreements and strategic partnerships, establish new standards, and find innovative solutions for real estate development.
Additionally, the gathering will unveil the latest agreements to secure supply chains between the NHC and a range of local and global partners.
Several scheduled dialogue sessions will showcase the latest technologies in the building materials industries. These talks will facilitate the exchange of expertise between local and international companies, aiming to enhance the supply chain network.
On May 5, the NHC signed a deal with China’s leading firm, CITIC Construction Group, to establish an industrial city and logistic zones for building materials, comprising 12 factories, with the objective of securing supply chains for the NHC’s housing projects.
NHC CEO Mohammad Al-Buty finalized the deal during Al-Hogail’s official visit to China.
The NHC said the agreement with the Chinese construction group is part of its efforts to secure supply chains for its housing projects and ensure their timely completion and high quality.
The Saudi company highlighted that the deal includes the construction of 12 factories specializing in building materials, harnessing Chinese expertise, and involving local factories to uplift business standards.
It added that the agreement also aims to draw top-tier service providers across various company sectors, its subsidiaries, and other projects.
The firm pointed out that the pact is expected to maximize the economic and developmental impact of the real estate sector in the Kingdom, develop housing projects, enhance their quality, and promote national transformation in the construction sector through these industrial cities and logistic zones.
British Airways to resume Jeddah operations, enhancing UK-Saudi connectivity
RIYADH: British Airways is set to resume operations in Jeddah after a five-year hiatus, aiming to enhance connectivity to the Kingdom, the airline said.
Announced at the GREAT Futures Initiative Conference held in Riyadh, the route is scheduled to commence on Nov. 4, offering year-round service to the Saudi city from London Heathrow, according to a press release.
The new service, operated by the Boeing 787 fleet, will total four flights per week, and sit alongside the daily operations between Riyadh and Heathrow.
Speaking at the event, Colm Lacy, British Airways’ chief commercial officer, said: “We have a long history of connecting families, friends and businesses in the Kingdom of Saudi Arabia with our home in London.”
He added: “There are significant opportunities for businesses in both countries, so we’re pleased we can re-build our connectivity and strengthen links between the two kingdoms.”
In a joint statement, Mazen Johar, CEO of Jeddah Airports, and Majid Khan, CEO of Saudi Air Connectivity Program, said: “The return of the UK’s flag carrier to Jeddah, with new flights from London Heathrow, will further strengthen our air connectivity from the capital.”
They added: "With British Airways’ leading network in the UK, Europe, and onwards to North America, travelers can experience an untouched wonder, Saudi Arabia, through one of the leading global carriers, further supporting our growing inbound tourism and aviation market.”
Earlier this week, the Kingdom’s General Authority of Civil Aviation released a statement revealing that an ambitious roadmap outlining Saudi Arabia’s tenfold growth in the aviation sector into a $2 billion industry is on track to be unveiled at the Future Aviation Forum in May.
The plans encompass the business jet segment, including charter, private, and corporate aircraft, and aim to bolster Saudi Arabia’s development as a global high-value enterprise and tourist destination, the statement noted at the time.
It also highlighted that the plan comes after Saudi Arabia revised its 2030 tourism target upward from 100 million to 150 million visitors in October 2023.
Also earlier this week, the Kingdom’s Minister of Commerce announced that partnerships between Saudi Arabia and the UK encompass over 60 initiatives across 13 sectors, with trade between the countries up by a third since 2018.
During the opening remarks of the GREAT Futures Initiative Conference, Majid Al-Qasabi noted that bilateral trade surged between 2018 and 2023, exceeding £79 billion ($99.12 billion).
With over 1,100 active licenses for UK investors, developments such as the giga-projects in the Kingdom and policy reforms are enhancing business opportunities, the minister emphasized.
Closing Bell: Saudi main index dips for the second consecutive day
RIYADH: Saudi Arabia’s Tadawul All Share Index continued its downward movement for the second consecutive day, as it shed 17.71 points to close at 12,103.20.
The total trading turnover of the benchmark index on Wednesday was SR6.30 billion ($1.68 billion), with 128 stocks advancing and 96 declining.
On the other hand, Nomu, the parallel market, marginally went up by 0.03 percent to 26,666.16.
However, the MSCI Tadawul Index edged down by 0.47 percent to close at 1,512.30.
Saudi Industrial Development Co. was the best-performing stock on the main index. The company’s share price surged by 9.95 percent to SR9.61.
Other top performers were Wafrah for Industry and Development Co. and Al-Baha Investment and Development Co., whose share prices soared by 9.9 percent and 7.69 percent respectively.
The worst-performing stock was Basic Chemical Industries Co., as its share price slipped by 7.57 percent to SR33.60.
On the announcements front, Seera Group Holding revealed that its net profit rose to SR61 million in the first quarter of this year, representing a rise of 7.01 percent compared to the same period of the previous year.
In a Tadawul statement, the travel firm noted its total revenue for the first quarter stood at SR1.07 billion year on year driven by continued growth in the car rental and travel platform segments and the new acquisitions within Portman Travel Group.
Lumi Rental Co. also announced its financial results. The company said that its net profit fell by 11.15 percent to SR44.71 million in the first quarter of this year compared to the same period in 2023.
Zamil Industrial Investment Co., which reported its earnings, revealed that it swung to a net profit of SR5.42 million in the first three months of this year, compared to a net loss of 13.81 million in the same period of the preceding year.
Zamil attributed the rise in profits to its sales growth, which went up by 25.5 percent, along with higher operating income in the steel and insulation sectors.
Meanwhile, Shatirah House Restaurant Co., also known as Burgerizzr, reported a net profit of SR5.3 million in the first quarter of this year, compared to the SR1.4 million net loss it incurred in the same quarter of 2023.
In a Tadawul statement, Burgerizzr said that the rise in net profit was driven by higher same-store sales and an increased number of guests.
AI, tech to reshape healthcare in Saudi Arabia, UK: experts
RIYADH: Saudi and British experts on Wednesday highlighted the importance of artificial intelligence and technology to enhance healthcare.
Taking to the main stage on the second day of the GREAT Futures Conference in Riyadh, experts from both nations shed light on the fast-evolving landscape of the health sector and the increasing role of the latest technology in that evolution.
A series of panel discussions revealed that the Kingdom aims to reduce waiting time and costs and improve the quality of life for its citizens through a strong focus on a more preventive, patient-centric system that brings quality care beyond the walls of the hospital and into an individual’s own home.
Inaugurating the event, the CEO of the Health Sector Transformation Program, which is part of the nation’s Vision 2030 directives, Dr. Khalid Al-Shaibani, said: “In Saudi Arabia, we have embraced digital health as a priority because of its potential to enhance healthcare delivery, improve patient outcomes, and drive economic growth.”
The CEO further posited that through a clear and unified vision, all sectors of the Saudi government are working together to make this future a reality, saying: “This initiative represents a bold and innovative approach where various sectors collectively work to enhance the health of our nation. By integrating health, equity, and sustainability into all decision-making processes, we foster an environment that promotes the well-being of our citizens.”
A future that, according to Al-Shaibani and his fellow speakers, including the UK’s Undersecretary of State in the Department of Health and Social Care, Nick Markham, and Dr. Abdulaziz Al-Homod, chief medical officer of Seha Virtual Hospital, could allow medical professionals to bridge the gap between primary and secondary care.
This period, which is often characterized by an utter lack of awareness of the patient’s condition, could be supplemented by wearable technology, which could then track the patient’s vitals while simultaneously uploading them to a unified database, allowing for a clearer understanding of the patient’s progress before secondary care.
Al-Homod noted that in secondary care, which could also become costly, innovation could further become an asset by allowing visits to be virtual, cutting costs and improving efficiency.
Highlighting the overall enthusiasm of the nation, he said: “It’s good to be here during this time and era if you are a company or a startup that wants to work in healthcare, there is a clear will and a clear strategy and we are focused on people. The healthcare ecosystem is hungry for innovation, and we think NEOM is gonna be unique and that Saudi Arabia is going to continue to lead (in healthcare innovation).”
Discussing areas of collaboration between the two kingdoms and the ever-present question of the use of AI, the undersecretary of state noted that the UK’s national health system, known as the NHS, has an extensive database, perhaps the largest in the world, due to its unified presence since 1948.
This data could be “fed” to AI to allow for the detection of patterns that were perhaps previously not possible through merely the human eye.
Markham said: “Actually, we can pull this all together into a fantastic set of data which can be used on parallel anywhere else, and we’ve got the diversity of the population as well because we know a lot of countries have homogeneous populations. You throw that all at AI and start to see patterns that we can’t see.”
According to the British official, this could serve to address long-standing medical questions, such as early detection of dementia and its treatment.
Further affirming the collaborative relationship between the two nations in the field of emerging technologies, the head of the Research Development and Innovation Authority, Mohammed Al-Otaibi, noted that Saudi Arabia, represented by his body, signed a memorandum of understanding with the UK’s Department for Science, Innovation and Technology to work on research and development in deep-tech and science fields.
Looking to the future, Al-Otaibi pointed to the recently launched Research Lab Support Program, which aims to disperse SR312 million ($83 million) to 30 entities overseeing 86 research labs across the Kingdom to accelerate R&D in medicine and beyond.
